We’re heading into the heart of corporate earnings season — and the misses are piling up fast!

Take International Business Machines (IBM, Weiss Ratings: B-), or “Big Blue” if you prefer. The global computer hardware, software, and tech consulting giant reported third-quarter adjusted profit of $3.68 a share — down from $4.08 a year earlier and missing expectations. Sales fell 4 percent to $22.4 billion.

What’s more, IBM doesn’t think things will improve anytime soon. The firm slashed its 2014 free cash flow forecast to a range of $12 billion to $13 billion from the $16 billion projection it offered last quarter. It also abandoned a profit target for 2015, and warned that it will need to cut many more jobs than it already has because of its business challenges.

IBM isn’t the only marquee name to disappoint investors though. Wal-Mart Stores (WMT, Weiss Ratings: B) just cut its 2014 sales growth forecast to a range of 2 percent to 3 percent from as much as 5 percent. The world’s biggest retailer said investments in e-commerce and other programs would pressure profits as well.

Wal-Mart’s supercenters suffered a 0.3 percent same-store sales decline in the second quarter compared with last year.

I recently highlighted how some of the nation’s biggest banks couldn’t get the job done, either. Even some of the highest of the high-flyers are getting crushed this earnings season. Just look at Netflix (NFLX, Weiss Ratings: C+). The stock plunged more than $100 the other day after releasing disappointing subscriber figures and a lackluster profit outlook.

Can the earnings season still be saved? Sure. Some of the biggest names — think Apple (AAPL, Weiss Ratings: A-) or General Motors (GM, Weiss Ratings: C+) — are either giving their profit reports right now or poised to do so soon. If the news is good, it could help turn the tide.

“Can the earnings season still be saved?”

But I can’t help but wonder: Do we have to add deteriorating earnings trends to the long list of challenges facing stocks right now? And if so, does that mean Friday’s almost-300-point rally in the Dow was nothing more than an isolated flash in the pan, rather than a change in trend?

Multiple conversations are going strong over at the website, especially with regards to the ongoing Ebola crisis.

ReaderJeff weighed in on the government’s mistakes in combating the virus, saying: “From the people who brought you FEMA … do you expect anything less? The protocol should have been to send a CDC swat team to that hospital immediately when Duncan was admitted. Our lives and our economy are in the hands of arrogant, incompetent bureaucrats. Travel restrictions are needed not just to protect America from Ebola but from our own incompetence.”

Reader Dr. Jerome B. added: “As a retired physician who practiced during the days of common sense, I am appalled by the total lack of coordination and realistic approach to this Ebola outbreak. The whole approach has been political rather than pragmatic. I see this whole situation spiraling out of control and this administration only becoming more inept.”

In addition, Reader Ron said: “The CDC and WHO have the same problem as our U.S. government, too many layers of management that are sucking up the funds and worrying about themselves. This leaves ‘not enough’ left for the people that do the actual work of protecting us (taxpayers).

“A new ‘Czar’ is doing nothing more than adding one more layer of management, which will slow down any real responses even more. With Obama appointing so many Czars, is anyone other than me old enough to remember that Czars are communist dictators?”

Great insights all around — I am certainly not very encouraged by the early screw-ups, and I sincerely hope that the CDC and the rest of the feds get their act together soon!

Speaking of feds — or technically, the Fed — Reader Big M. took a shot at the misguided policy choices out of Bernanke, Yellen, and Co. He said: “The ‘Fed Wizards’ program works just fine for them and the 1 percent. They printed three trillion dollars, and where did it go? A good percentage had to make its way into someone’s pockets. It surely did not make its way to the middle class or lower, so the program works, for them.

Couldn’t have said it better myself! Keep the discussion going by hopping over to the comment section and adding your thoughts!

Other Developments of the Day

Moody’s Investors Service took the scalpel to its Russian sovereign debt rating, cutting it to Baa2 from Baa1. That’s the second-lowest possible investment grade rating, so it wouldn’t take much to push Russia into “junk” territory. The country has shelled out more than $13 billion in the last month alone to prop up its ruble currency amid tighter sanctions and a weakening economy.

Will the Federal Reserve end its useless QE program at the Oct. 28-29 policy meeting? The Wall Street Journal’s unofficial Fed mouthpiece reporter, Jon Hilsenrath, says yes in an article today.

Those days of 10 percent+ GDP growth in China? They’re long gone, according to a new report from the Conference Board. The research group expects Chinese GDP growth to slow towards 3.9 percent over the next few years from 7.7 percent in 2013, a significant challenge for a world that’s lacking growth.

Is Adidas AG going to sell off its Reebok sneaker business? That’s the speculation making its way through the market. The Hong Kong private equity firm Jynwel Capital and Abu Dhabi’s sovereign wealth managers are reportedly behind a push to buy Reebok for around $2.2 billion.

Until next time,

Mike Larson

P.S. All enrollment for Martin’s Ultimate Retirement Course CLOSES TOMORROW! Make sure you click here to register for this FREE course while there is still time!

Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.

{12 comments }

JesseMonday, October 20, 2014 at 5:39 pm

Remember how the U.S. govt (President & congress) LIE TO ALL OF US ALL THE TIME ABOUT EVERYTHING!!!!! Yes!
So,
If you want to know How the Red Cross infected the Africans with contaminated-Ebola Virus to kill them off so Obama & Queen Elizabeth can grab all the Gold & diamond mines (as she has been doing for 100 years!) . . .
GO TO:: http://www.jimstonefreelance.com

As always the truth will amaze you/us.
A frined in Tampa, Jesse

KarenMonday, October 20, 2014 at 5:41 pm

I believe the market will hit lower numbers than the last time it tanked and I believe it will happen whenever Obama lets the increases in premiums for 2015 Obama care be known. I did not think Walmart would put it’s part-time workers on Obama care, but they did so I am certain a new bottom is coming lower than the one in 2009! more layoffs are coming also and they have started.

Sir2Monday, October 20, 2014 at 5:58 pm

People who bad mouth the fed should look at some facts. “Reader Big M. took a shot at the misguided policy choices out of Bernanke, Yellen, and Co. He said: The ‘Fed Wizards’ program works just fine for them and the 1 percent.” Let’s look at some results. The US economy is growing; whereas, Europe, that tried austerity, is falling into recession.

FredMonday, October 20, 2014 at 6:03 pm

Actually, earnings hits and misses do not coorelate well historically with the stock market going up…….or down. This whole concept is a HUGE canard yet the talking heads at CNBC and other such outlets keep carrying on as if it is gospel. If you chart both activities over long periods of time, you will have a lot of trouble trying to make any such connection. It just does not exist in any reliable fashion.

Dale KMonday, October 20, 2014 at 6:12 pm

What we’re seeing is a bounce on it’s way up with no real legs. It will bring in a very harsh down turn, a true correction.

Frank EllisMonday, October 20, 2014 at 7:10 pm

Mike, you have some “eyes wide open” and wise readers. It is so sad that they cannot determine elections because, if they could America might still be saved from Obama’s fast charging “fundamental transformation.” Alas, the “low-information” voters now rule, and there really is no cure for stupid. Our national credit card will run out someday, and then the free-loaders will burn and tear up everything. Big costs and taxes associated with Obamacare next year, wide open borders and millions more low skill, uneducated illegals, etc. will add to the chaos coming at us like a hurricane. I’m sure the pit is now to deep.

The Great CorrectoMonday, October 20, 2014 at 7:35 pm

Not to pick nits, Ron, but perhaps you should have stayed awake thru History class. Czar (singular) Nicholas was the guy who was OVERTHROWN by the Commies, circa 1917. And no, Obama wasn’t around to lead the Bolshevik revolution, in which said Czar was overthrown. Nor is he a Muslim, nor was he born on Mars. Just FYI …

SnojakTuesday, October 21, 2014 at 7:42 am

Thank you for correcting “Ron’s” erroneous thoughts. It is very dangerous when people spout off about history are totally WRONG. As “Correcto” pointed out, the Czar (or Tsar) was most assuredly NOT a Communist, in fact, as an Emperor of the Russian Empire, he was actively fighting them as the Communists (or Bolsheviks) where trying to oust him as leader.

Bret SmithMonday, October 20, 2014 at 7:39 pm

“A new ‘Czar’ is doing nothing more than adding one more layer of management, which will slow down any real responses even more. With Obama appointing so many Czars, is anyone other than me old enough to remember that Czars are communist dictators?”
According to Wikipedia, George W Bush appointed 33 Czars during his reign of error. Also Bush 41 appointed 3, Reagan appointed 1, and even Nixon himself appointed 3 Czars.
Yes, Obama has appointed more Czars, but you are fueling the flames of ignorance with that statement.

tim zampMonday, October 20, 2014 at 7:47 pm

If earnings don’t get better in a couple days ..down we go.

mikeMonday, October 20, 2014 at 9:12 pm

We do not have free markets, just interventions by the central banks and government propaganda instead of legitimate financial reporting. While one can make some money in this ponzi scheme, you need to drink a gallon of maalox!

Joseph J TechieraTuesday, October 21, 2014 at 12:51 am

If the economy is so bad why is it that just about every big Hospital in Boston is Building adding on to there already massive structures, I just spent 4 day in the medical center of Boston the Longwood area were Brigham and Woman’s Beth Israel, Children’s Hospital,all the rest of the Big Hospital chains. They gave us a map of the Beth Israel Deconics complex just to find were they brought my mother once we found here she was on the 10th floor of a 12 floor building and across the street my brother who works for a crane company is putting up another 12 story building so were is all the money coming from, ow yes the building my mother was in was being renovated. So I can’t be leave the economy is in the dump. All these big companies are saying that all there profit are being made out of the county so they don’t have to pay TAXES to the US Government.